'\ . ".

IN THE WEST VIRGINIA SUPREME COURT OF APPEALS

SHARON A. MARCHIOI Executrix . of the Estate of Pauline Virginia Willettl

Plaintiff/ Appellantl

v.

CLARKSBURG NURSING & REHABILITATION CENTERI INC.I a West Virginia Corporationl d/b/ a Clarksburg Continuous Care Center, SHEILA K. CLARKI Executive Director of Oarksburg Nursing & Rehabilitation Centerl Inc'l d/b/ a Oarksburg Continuous Care Centerl JOHN/JANE DOE #1, and JENNIFER MCWHORTERI

Defendants/ Appellees.

WV Supreme Court Docket No. 35635

JUL 9 2010

RORY L. PERRY II, CLERK SUPREME COURT OF APPEALS

OF WEST VIRGINIA

BRIEF OF APPELLANT SHARON A. MARCHIO (FOR REVIEW OF CERTIFIED QUESTION)

From the Circuit Court of Harrison County Civil Action No.: 08-C-334-3

The Honorable James A. Matishl Judge

ORAL PRESENTATION REQUESTED

Respectfully submitted by: Sharon A. Marchio, Executrix of the Estate of Pauline Virginia Willettl By counsel,

Frank E. Simmermanl Jr'l (WVSB# 3403) Chad L. Taylor (WVSB# 10564) SIMMERMAN LAW OFFICEI PLLC 254 East Main Street Oarksburgl West Virginia 26301 Phone No. (304) 623-4900 Fax No. (304) 623-4906

TABLE OF CONTENTS

I. TYPE OF PROCEEDING AND NATURE OF RULING IN THE CIRCUIT COURT OF HARRISON COUNTY ..................... 1

II. STATEMENT OF FACTS .............................................. 5

III. ASSIGNMENT OF ERROR AND RULING BELOW ....................... 8

IV. ARGUMENT AND DISCUSSION OF THE LAW ......................... 8

A. The Federal Arbitration Act (FAA), 9 U.S.c. § 1 et seq., Does Not Preempt West Virginia Code § 16-5C-15(c) Because the Subject Arbitration Agreement is Null and Void as Contrary to Public Policy .................. 9

1. Generally applicable state laws may invalidate arbitration agreements unless the subject state law specifically targets arbitration agreements ................................................ 10

2. Courts have held that such an anti-waiver provision in the nursing home context invalidates arbitration agreements ................ 12

3. Negative authority is distinguishable .......................... 15

B. A Distinction Must be Made when Determining the Validity of Arbitration Agreements in the Nursing Home Context .......................... 18

C. Defendants' Arguments Regarding the Applicability of the FAA are Not Relevant Insofar as the Subject Arbitration Agreement is Void on its Face.22

V. RELIEF REQUESTED ................................................ 24

VI. POINTS AND AUTHORITIES RELIED UPON/ TABLE OF CASES ................................................... 25

i

NOW COMES the Appellant/Plaintiff (hereafter "Plaintiff"), Sharon A.

Marchio, Executrix of the Estate of Pauline Virginia Willett, by and through counsel,

Frank E. Simmerman, Jr., and Chad L. Taylor, of the Simmerman Law Office, PLLC, and

does hereby request oral argument of this instant appeal regarding the answer to a

Certified Question by the Circuit Court of Harrison County. For the reasons set forth

herein, Appellant respectfully submits that the response to the subject certified

question, as embodied in an Order and Certification of the Honorable James A. Matish,

Judge of the Fifteenth Judicial Circuit, entered February 24,2010, should more

appropriately be answered in the negative. In support thereof, Plaintiff states as

follows:

I. TYPE OF PROCEEDING AND NATURE OF RULING IN THE CIRCUIT COURT OF HARRISON COUNTY

Plaintiff Sharon A. Marchio is the duly qualified Executrix of the Estate of her

mother, Pauline Virginia Willett. Ms. Willett was a resident of the Clarksburg

Continuous Care Center ("Clarksburg Continuous Care"), owned and/ or operated by

the Defendants, from May 27, 2006, through July 3, 2006.

This lawsuit concerns deficiencies an,d negligence of Defendants in the care and

treatment of Ms. Willett, which caused Plaintiff, as the personal representative of

Pauline Virginia Willett, to file her two-count Complaint on July 2, 2008. Plaintiff's

Complaint alleges violations of the West Virginia Nursing Home Act (W.Va. Code § 16-

5C-1, et seq., hereafter, "NHA"); more specifically, Count I: inadequate staffing, and

Count II: deficiencies regarding nutrition, infection control, documentation, and overall

1

care. By way of further identification of the Appellees/Defendants (hereafter

"Defendants"), in addition to the parent corporation of the nursing home facility

(Oarksburg Nursing & Rehabilitation Center, Inc.), and the executive director of the

facility (Sheila K. Oark), Defendant "JohnlJane Doe #1" represents the facility's Clinical

Care Specialist, and Defendant Jennifer McWhorter (formerly "JohnlJane Doe #2" prior

to entry of a Stipulation of Substitution of Jennifer McWhorter for Defendant JohnlJane Doe

#2, on February 12,2010) was the Director of Nursing for the facility during Ms.

Willett's stay.

In response to Plaintiff's Complaint, on or about July 23, 2008, the Defendants

filed a Motion to Dismiss Plaintiffs Complaint and to Compel Arbitration, with supporting

Memorandum, to which Plaintiff responded on or about August 11, 2008. The Circuit

Court held a hearing of Defendants' Motion to Dismiss and to Compel Arbitration on

October 3, 2008, but reserved ruling on the same, as evidenced by an Order entered

November 17, 2008. Subsequently, discovery ensued in this matter.

Insofar as the Circuit Court reserved ruling on their initial Motion to Dismiss,

Defendants filed their Answer to Plaintiff's Complaint on or about November 12, 2008,

along with a second Motion to Dismiss, essentially asserting that West Virginia's

Medical Professional Liability Act (hereafter "MPLA") provides the exclusive remedy

for Plaintiff's allegations, and moving the Court to dismiss Plaintiff's Complaint for

failure to state a claim upon which relief can be granted.

2

The Circuit Court heard Defendants' second Motion to Dismiss on January 29,

2009, and reserved ruling on the same. At this hearing, the prospect of submitting

certified questions on the issues raised by Defendants' two Motions to Dismiss was

discussed, namely, (1) the relationship between the West Virginia Nursing Home Act

(W.Va. Code § 16-5C-1, et seq.) and the West Virginia Medical Professional Liability Act

(W.Va. Code § 55-7B-1, et seq.); and (2) the legality, applicability and/ or enforceability of

the arbitration agreement made part of the nursing home admission documents in this

matter, considering West Virginia Code § 16-5C-15(c).

Thereafter, recognizing that certification to the West Virginia Supreme Court of

Appeals was the proper method of resolving the pending issues of law, Judge Matish

entered an Order Setting Deadline for Parties' Submission of Proposed Certified Questions to

the Court, on September 21, 2009. On October 2, 2009, Defendants filed Defendants'

Certified Questions Regarding (1) the Enforceability of the Arbitration Agreement Between

Plaintiff and Clarksburg Nursing and Rehabilitation Center and (2) the Applicability of the

West Virginia Nursing Home Act to Plaintiffs Claims; and on or about October 2,2009,

Plaintiff filed her Motion for Certification of Questions of Law Contained Herein to the West

Virginia Supreme Court of Appeals, Pursuant to West Virginia Code § 58-5-2, Regarding the

Validity of the Subject Arbitration Agreement, and Memorandum in Support of Position that

the MPLA/NHA Issue has been Resolved by the West Virginia Supreme Court.

Further, the parties subsequently filed a response to their adversary's proposed

certified questions.

3

Following its review of the parties' proposed certified questions, supporting

memoranda, and responses to the same, the Circuit Court of Harrison County

concluded that only one certified question was appropriate for submission to the West

Virginia Supreme Court of Appeals, that being on the issue of the arbitration

agreement, as reflected in the Court's February 24, 2010, Order Answering Certified

Question. In the Court's Order, Judge Matish framed this single certified question as

follows:

Is West Virginia Code § 16-5C-15(c), which provides in pertinent part

that " [a]ny waiver by a resident or his or her representative of the right to

commence an action under this section, whether oral or in writing, shall be null

and void as contrary to public policy," preempted by the Federal Arbitration

Act, 9'U.S.C. § 1 et seq., when a nursing home resident's representative has

executed an arbitration agreement as part of the nursing home's admission

documents and the arbitration agreement contains the following terms and

conditions:

a. the arbitration agreement applies to and binds both parties by its terms;

b. the arbitration agreement contains language in upper case typescript

stating as follows: "THE PARTIES UNDERSTAND AND AGREE THAT

BY ENTERING THIS ARBITRATION AGREEMENT THEY ARE

GIVING UP AND WAIVING THEIR CONSTITUTIONAL RIGHT TO

4

HA VB ANY CLAIM DEODED IN COURT OF LAW BEFORE A JUDGE

AND A JURY."; and

c. the resident's representative is specifically advised that she has the right

to seek legal counsel concerning the arbitration agreement, the execution

of the arbitration agreement is not a pre-condition to admission to the

nursing home facility, and the arbitration agreement may be rescinded

by the resident through written notice to the facility within thirty (30)

days of signing the arbitration agreement.

Answer: Yes.

Accordingly, Plaintiff Sharon A. Marchio, as a party aggrieved by the Circuit

Court of Harrison County's answer to the aforementioned certified question, requests

that this Court reverse the Circuit Court's ruling, by answering this question in the

negative.

II. STATEMENT OF FACTS

As mentioned above, this action is brought by Sharon A. Marchio as the

personal representative of her mother, Pauline Virginia Willett. Ms. Willett was a

resident of Clarksburg Continuous Care from May 27, 2006 through July 3,2006. At

such time, Ms. Willett was ninety-four (94) years old and suffered from Alzheimer's

dementia, ischemic cardiomyopathy, a previous myocardial infarction, hypertension,

5

COPD, asthma, osteoarthritis, and osteoporosis. It was noted in Ms. Willett's Pre­

Admission Screening for the nursing home that while serious, her health conditions

were not terminal.

Ms. Willett had previously resided with the Plaintiff, her daughter who was

her principal care giver, but due to the Plaintiff's own health concerns, the Plaintiff was

temporarily unable to care for Ms. Willett. Therefore, the decision was made to place

Ms. Willett in a nursing home facility for a period of not more than three (3) months

while the Plaintiff recovered, and after such time it was intended that Ms. Willett would

return to her daughter's home.

On or about May 21, 2006, Ms. Willett was briefly admitted to United Hospital

Center (hereafter /lURC") in Clarksburg, West Virginia, for treatment of severe

diarrhea, abdominal cramps, and uncontrolled diabetes. On or about May 27, 2006, Ms.

Willett was discharged from URC and transferred to Oarksburg Continuous Care.

Included as part of the nursing home's seventy-three (73) page Admissions Agreement,

was the subject arbitration agreement which Plaintiff executed on May 25, 2006, in

preparation for her mother's transfer to the nursing home (agreement attached hereto

as Exhibit 1).

During the following five (5) weeks at Clarksburg Continuous Care, Ms.

Willett's condition dramatically declined, ultimately leading to her death, on July 6,

2006. Upon admittance to Clarksburg Continuous Care on May 27, 2006, Ms. Willett

6

presented alert, able to communicate her needs and answer questions appropriately,

and was pleasant and cooperative with staff. During her time at Oarksburg

Continuous Care, however, Ms. Willett suffered rapid weight loss, two (2) urinary tract

infections, worsening of her decubitus ulcers including an infected pressure sore, a

fungal infection of the groin area, diarrhea caused by Clostridium difficile (C-Diff)

resulting in isolation, and was transferred to the emergency room for an abdominal

mass. Further, in contrast to Ms. Willett's communicative and pleasant demeanor upon

admittance to Oarksburg Continuous Care, near the time of her discharge from the

facility, Ms. Willett appeared withdrawn, less interactive with others, began refusing

meals, and was noted to be lethargic.

The debilitated state in which Ms. Willett was found by family members on

July 3, 2006, caused her family to insist that she be transported to the emergency room

of UHC for evaluation and treatment. Consequently, Ms. Willett was sent to the

emergency room at UHC whereat she presented with a cough and difficulty breathing.

During Ms. Willett's evaluation at the hospital, it was discovered that she was

dehydrated, had pneumonia, septicemia, an acute myocardial infarction (MI), and was

in renal failure and congestive heart failure.

As a result of the Defendants' delay in seeking physician intervention with a

resulting delay in diagnosing and treating Ms. Willett's conditions, she never recovered

from these afflictions and ultimately expired in the morning of July 6,2006, at UHC.

7

Ms. Willett's death certificate notes that the immediate cause of her death was

respiratory arrest, however, additional conditions leading to her death include sepsis

and pneumonia, each of which were discovered and diagnosed at UHC on or about July

4, 2006, and were deemed to have been present in the days immediately preceding Ms.

Willett's death.

As a result of the care and treatment that Ms. Willett's family witnessed at the

Oarksburg Continuous Care facility, the Plaintiff filed a complaint with the West

Virginia Department of Health and Human Resources's Office of Health Facility

Licensure and Certification (OHFLAC). A subsequent survey was conducted of the

facility on October 5, 2006, which resulted in the Plaintiff's complaint being verified and

the facility being cited for numerous deficiencies regarding the care and treatment of

Ms. Willett ("resident 95"), and other residents, regarding the exercise of resident rights,

documentation, nutrition, and infection control (survey report attached hereto as

Exhibit 2). The primary corrective action noted on the survey report for each deficiency

involving Ms. Willett was that II [r]esident #95 is no longer a resident of the facility."

Such a "remedial measure" was only possible because of Ms. Willett's untimely death

which was proximately caused and/ or contributed to by the negligence and

deficiencies of the Defendants.

Such OHFLAC survey report further references an interview conducted by the

surveyors with the Director of Nursing and the Clinical Care Specialist of Clarksburg

Continuous Care wherein the Clinical Care Specialist stated, with regard to the cited

8

deficiencies, "that they had fallen behlnd due to staffing", thus, essentially conceding or

admitting that inadequate staffing caused and/ or contributed to the deficiencies in Ms.

Willett's care.

Accordingly, on July 2,2008, Sharon A. Marchio caused this action to be filed

and seeks damages, including punitive damages, from the Defendants pursuant to West

Virginia Code § 16-5C-15(c) for her mother's pain, suffering, loss of capacity to enjoy

life, loss of dignity, and ultimate death.

III. ASSIGNMENT OF ERROR AND RULING BELOW

As previously noted, the Circuit Court of Harrison County has answered its

proposed certified question in a manner adverse to Plaintiff, and it is submitted on

behalf of Plaintiff that the Circuit Court erred in answering the question affirmatively

by failing to give meaning and effect to the pertinent provisions of the West Virginia

Nursing Home Act (W.Va. Code § 16-5C-l, et seq.).

IV. ARGUMENT AND DISCUSSION OF THE LAW

A. The Federal Arbitration Act (FAA), 9 U.S.c. § 1 et seq., Does Not Preempt West Virginia Code § 16-SC-1S(c) Because the Subject Arbitration Agreement is Null and Void as Contrary to Public Policy.

The arbitration agreement executed by Plaintiff is not binding upon the parties

to this action because it is in direct violation of West Virginia Code § 16-5C-15(c) of the

West Virginia Nursing Home Act, and is thus explicitly "null and void as contrary to

public policy." W.Va. Code § 16-5C-15(c). The relevant portion of th!s code provision

states:

9

Id.

Any waiver by a resident or his or her legal representative of the right to commence an action under this section, whether oral or in writing, shall be null and void as contrary to public policy.

Moreover, this waiver-invalidating provision is conspicuously found in the

West Virginia Nursing Home Act, the very Act which the Plaintiff charges the

Defendants with violating, and such provision is not unique to nursing homes insofar

as it also appears in West Virginia statutes regarding assisted living residences (See

W.Va. Code § 16-5D-15(f)) and residential care communities (See W.Va. Code § 16-5N-

15(c)). See also similar anti-waiver provisions in W.Va. Code § 21-5-10 (Wage Payment and

Collection Act); W.Va. Code § 31-17-17(b) (West Virginia Residential Mortgage Lender,

Broker and Servicer Act); and W.Va. Code § 38-8-15 (Exemptions from Levies).

1. Generally applicable state laws may invalidate arbitration agreements unless the subject state law specifically targets arbitration agreements.

The subject arbitration agreement executed by Plaintiff and by Clarksburg

Continuous Care's authorized agent contains the provision that II [t]his Arbitration

Agreement shall be governed by and interpreted under the Federal Arbitration Act, 9

u.s.C. §§ 1-16./1 Despite this provision, the language of the Federal Arbitration Act (9

u.s.C. § 1 et seq., hereafter "F AA/I) itself states that an arbitration agreement II shall be

valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for

the revocation of any contract./I (emphasis added) 9 U.S.c. § 2.

10

Courts interpreting this statutory language have held that state laws will apply

to arbitration agreements, and accordingly may also invalidate the same, as long as the

subject state law does not specifically target arbitration agreements. See First Options of

Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)("When deciding whether the parties

agree to arbitrate a certain matter ... courts generally ... should apply ordinary state­

law principles that govern the formation of contracts."); Adkins v. Labor Ready, Inc., 303

F.3d 496, 501 (4th Cir.2002)("Whether a party agreed to arbitrate a particular dispute is a

question of state law governing contract formation."). More specifically, the United

States Supreme Court in Doctors's Assodates, Inc. v. Casarotto, 517 U.S. 681, 116 S.Ct.

1652, held that the above-cited language of section 2 of the FAA" declares that state law

may be applied" if that law arose to govern issues concerning the validity, revocability,

and enforceability of contracts generally.'''' (emphasis by the Court) Id. at 686-687 citing

Perry v. Thomas, 482 U.S. 483, 492, 107 S.Ct. 2520, 2527 (1987). The Doctor's Assodates

Court stated further that" Courts may not. .. invalidate arbitration agreements under

state laws applicable only to arbitration provisions." (emphasis by the Court) 517 U.S. at

687.

Though not involving a statutory anti-waiver provision, the West Virginia

Supreme Court has held an arbitration agreement invalid under general state law

principles. In State ex reI. Saylor v. Wilkes, 216 W.Va. 766, 613 S.E.2d 914 (2005) cert denied

546 U.S. 958, the Supreme Court found that the FAA applies to arbitration agreements

"only when such agreements constitute valid contracts under state law," and

11

subsequently invalidated the subject arbitration agreement based upon

unconscionability and adhesion. Id. at 216 W.Va. 772,613 S.E.2d 920. Thus, the

Supreme Court has recognized that a general applicable contract law may invalidate an

arbitration provision.

In the instant case, West Virginia Code § 16-5C-15(c) is a general prohibition on

"any waiver" which interferes with the statutory right of a nursing home resident, or

their representative, to bring a private action pursuant to the Nursing Home Act which

in no way singles out arbitration agreements. Moreover, insofar as the interest of

"public policy" concerns the validity, revocability, and enforceability of contracts

generally, the subject arbitration agreement's violation of public policy (pursuant to the

NHA) represents a legitimate state law contract defense which should void such

agreement. Carter v. SSC Odin Operating Co., LLC, 885 N.E.2d 1204, 1209 (Ill. App. 5

Dist. 2008), See also, Kinkel v. Cingular Wireless LLC, 223 I11.2d I, 15-19, 306 Ill.Dec. 157,

857 N.E.2d 250 (2006).

Therefore, the NHA should be deemed to invalidate the subject arbitration

agreement in this case and this Court should accordingly answer the subject certified

question in the negative.

2. Courts have held that such an anti-waiver provision in the nursing home context invalidates arbitration agreements.

While this Court has not had occasion to rule on the specific'issue that is subject

of this Brief, the Circuit Court of Jefferson County, West Virginia issued an Order

12

regarding this precise issue in a similar case. On July 30, 2008, the Honorable Gina M.

Groh entered an Order Denying Defendants' Motion to Compel Specific Performance of

Arbitration Agreement and to Stay This Action Pending Arbitration (Order attached hereto

as Exhibit 3) in the matter of Luttrell v. Canterbury of Shepherdstown Limited Partnership, et

al. In declaring that the arbitration agreement in that case was void, Judge Groh cited

West Virginia caselaw holding that contracts which contravene public policy are void.

See Wellington Power Corp. v. CNA Sur. Corp., 217 W.Va. 33, 39, 614 S.E.2d 680,686

(2005)("no action can be predicated upon a contract of any kind or in any form which is

expressly forbidden by law or otherwise void.").

Judge Groh held further that because West Virginia Code § 16-5C-15(c) does

not apply solely to arbitration agreements nor even mentions arbitration, this provision

is one of "general applicability" which could indeed void" any type of contract or

agreement by which the resident waived her rights to commence an action against a

nursing home." Or. Denying Defs.' Mot. Dismiss p. 7 Guly 30, 2008). Accordingly,

Judge Groh concluded that West Virginia Code § 16-5C-15(c) "is part of the State

contract law that the FAA itself applies to the interpretation of arbitration agreements."

(emphasis by the Court) ld.

In reaching her decision, Judge Groh relied on one of the few other reported

decisions on the precise issue at bar, a decision by the Appellate Court for the Fifth

District of Illinois affirming the denial of the defendant's Motion to Compel Arbitration.

See Carter v. SSC Odin Operating Co., LLC, 885 N.E.2d 1204 (Ill. App. 5 Dist. 2008). The

13

Carter Court had before it two anti-waiver sections of the Illinois Nursing Home Care

Act, one of which being almost identical to the relevant section of West Virginia's

Nursing Home Act stating:

Any waiver by a resident or his legal representative of the right to commence an action under Sections 3-601 through 3-607, whether oral or in writing, shall be null and void, and without legal force or effect.

381 Ill.App.3d 717, 721,885 N.E.2d 1204, 1208, citing 210 ILCS 45/3-606 (West 2006).

In concluding that the aforementioned section of the Illinois Nursing Home Act

was not pre-empted by the FAA, the Carter Court held, first, that the 111inois anti-waiver

provisions, like the relevant West Virginia provision, do not mention arbitration

agreements at all and thus would apply equally to all contracts which seek to limit an

individual's right to bring a suit under the nursing home act; and second, /I to the extent

that the sections may void agreements calling for arbitration, this is an incidental,

tangential effect of the sections, not their primary purpose, and so the sections can

hardly be said to (specifically target arbitration agreements."' 381 Ill.App.3d at 722

(citing Doctor's Associates, Inc., 517 U.S. 681, 685, and Perry, 482 U.s. 483, 492 n. 9).

The situation in Carter is practically identical to that of the parties in the instant

action: the plaintiff, on behalf of the resident, signed an arbitration agreement which

specifically mentioned the FAA, as part of documents regarding the resident's

admission to a nursing home. When the resident expired, the plaintiff filed suit alleging

violations of Illinois's Nursing Home Act and for wrongful death which resulted in the

14

defendants filing a Motion to Compel Arbitration. As mentioned above, the Carter

Court denied defendants' Motion to Compel Arbitration deeming the arbitration

agreement void pursuant to the Illinois anti-waiver statute.

Thus, insofar as the underlying facts and relevant statutory provision is similar,

this Court should adopt the reasoning of the Carter Court, and relied on by the Jefferson

County Circuit Court. In doing so, Plaintiff respectfully requests that this Court declare

that the subject arbitration agreement is null and void by answering the subject certified

question in the negative.

3. Negative authority is distinguishable.

In an effort to candidly advise the Court of all applicable authority which

Plaintiff is aware, in addition to the two aforementioned Courts, Luttrell and Carter,

which have deemed arbitration agreements in the nursing home context void as

violative of public policy, Plaintiff is aware of three Courts which have came down on

the other side of the fence. These decisions are distinguishable, however, from the

matter at hand.

First, in the Circuit Court of McDowell County, West Virginia, the Honorable

Rudolph J. Murensky, II, ruled in an Order Granting Defendants' Motion to Dismiss

Plaintiffs Complaint and to Compel Arbitration, entered November 7, 2007, that the

Plaintiff and nursing home defendants were required to submit their differences to

arbitration pursuant to a pre-admission arbitration agreement (Order attached hereto as

Exhibit 4). Judge Murensky's Order, however, contains no mention or discussion of the

15

FAA nor the anti-waiver provision of the Nursing Home Act. From the Order, rather, it

appears that Judge Murensky's decision was based solely on the issue of

unconscionability. Insofar as this Order does not discuss the legal authority at issue in

the subject certified question, it should not influence this Court's ruling.

Second, the United States District Court for the Northern District of Oklahoma

held in Rainbow Health Care Center, Inc. v. Crutcher, (only Westlaw citation available,

2008 WL 268321 (N.D.Okla. 2008), that the Oklahoma Nursing Home Care Act's (Okla.

Stat. tit. 63, § 1-1900.1 et seq.) anti-waiver provisionl did not prevent the FAA's

preemption regarding a nursing home arbitration agreement. Id. While similar, the

applicable statute at issue in Rainbow is distinguishable from the West Virginia NHA.

More specifically, and as the Court will note from the footnoted provision of the

Oklahoma Nursing Home Care Act, the Oklahoma statute requires that parties submit

their claims to a "trial by jury", and seeks to invalidate any agreement to the contrary.

Section 16-5C-15(c) of the West Virginia NHA, however, is more general in nature by

merely preserving a nursing home resident's right to "commence an action". Further,

the West Virginia NHA is also distinguishable in that it provides the general contract

defense rationale for its anti-waiver provision, stating that any waiver is "contrary to

1 "Any party to an action brought under this section shall be entitled to a trial by jury and any waiver of the right to a trial by a jury, whether oral or in writing, prior to the commencement of any action, shall be null and void, and without legal force or effect." Okla. Stat. tit. 63, § 1-1939(E).

16

public policy." Accordingly, and as discussed previously, such a general contract

defense should not result in preemption by the FAA in the instant case.

Third, the Appellate Court of Illinois for the Second District, in Fosler v. Midwest

Care Center II, Inc., 391 Ill.App.3d 397, 911 N.E.2d 1003 (2009), disagreed with its sibling

circuit's decision in Carter and held that the FAA did in fact preempt the anti-waiver

provisions codified within the Illinois Nursing Home Care Act. Candidly, the Fosler

Court simply reached a different conclusion than the Carter Court despite examining

the same nursing home care act anti-waiver provisions, and essentially the same

authority.

In its opinion, though, the Fosler Court acknowledged that "public policy can

be a defense to enforcing a contract." Id. at 1010. Further, "[p]ublic policy is the legal

principle that no one may lawfully do that which has the tendency to injure the welfare

of the public." Id. citing O'Hara v. Ahlgren, Blumenfeld & Kempster, 127 Il1.2d 333, 341,

130 Ill.Dec.401 (1989). Accordingly, insofar as the West Virginia NHA at issue explicitly

cites public policy as rationale for the subject anti-waiver provision, this Court should

deem such provision to be a ground as "exist[s] at law or in equity for the revocation of

any contract", thus, not requiring preemption by the FAA. Additionally, it is worthy of

note that, distinguishable from the Fosler ruling, the Carter decision was appealed, but

denied writ of certiorari to the United States Supreme Court. SSC Odin Operating Co.,

LLC, v. Carter, 129 S.Ct. 2734 (2009).

17

Therefore, Plaintiff respectfully requests that this Court give meaning and

effect to the West Virginia Nursing Home Act, enacted by the Legislature to "ensure

protection of the rights and dignity of those using the services of [nursing home]

facilities", W.Va. Code § 16-5C-l, in determining that the FAA does not preempt the .

NHA.

B. A Distinction Must be Made when Determining the Validity of Arbitration Agreements in the Nursing Home Context.

In its Order Answering Certified Question, the Circuit Court of Harrison County

cited recent authority, which, when coupled with more seasoned Federal cases, caused

it to find that the FAA preempted the subject anti-waiver provision of the NHA? While

such decisions concern arbitration agreements with respect to preemption by the FAA,

Plaintiff submits that an important distinction must be made when dealing with the

issue of the FAA's preemption of arbitration agreements in the nursing home context,

particularly when at issue is an explicit legislative statute deeming any waiver of a

resident's right to bring an action void as contrary to public policy.

As this Court recently held, "our law has a bias against preemption.

Preemption of topics traditionally regulated by states -like health and safety - is greatly

disfavored in the absence of convincing evidence that Congress intended for a federal

law to displace a state law." Morgan v. Ford Motor Company, 680 S.E.2d 77 (2009), citing,

2 See generally, Preston v. Ferrer, 552 U.s. 346, 128 S.Ct. 978 (2008); Pine Ridge Coal Company v. Loftis, 217 P.5upp.2d 905 (S.D.W.Va.2003); Adkins v. Labor Ready, Inc., 303 F.3d 496 (4 th Cir.2002); Gilmer v. InterstatelJohnson Lane Corp., 500 U.s. 20, 111 S.Ct. 1647 (1991); Southland Corp. v. Keating, 465 U.S. 1,104 S.Ct. 852 (1984); Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 123 S.Ct. 2037 (2003).

18

among others, CSX Tranp. Inc. v. Easterwood, 507 U.S. 658, 664, 113 S.Ct. 1732, 123

L.Ed.2d 387 (1993)("Given the importance of federalism in our constitutional structure ..

. we entertain a strong presumption that federal statutes do not preempt state laws;

particularly those laws directed at subjects-like health and safety- 'traditionally

governed' by the states").

At issue in the case at bar, is a statute designed with the specific purpose to

protect the health and safety of nursing home residents in the State of West Virginia.

See generally, W.Va. Code § 16-5C-l. To this end, the Legislature of this state deemed it

necessary to include within the NHA, an explicit pronouncement that it is contrary to

the public policy of West Virginia to permit any waiver by a nursing home resident of

her right to commence an action for violations of the NHA. Meaning and effect must be

given to such a bold statement made to protect the rights of those less able than most to

protect themselves.

Further, a distinction between arbitration agreements in the nursing home

context, and arbitration agreements generally, is not exclusive to state lawmakers.

More particularly, in 2008, both houses of the United States Congress introduced nearly

identical bills entitled the "Fairness in Nursing Home Arbitration Act". (Senate Bill

2838 and House Bill 6126 attached hereto as Exhibit 5). Such bills sought to specifically

modify the FAA by stating that

[a} pre-dispute arbitration agreement between a long-term care facility and a resident of a long-term care facility (or anyone acting on behalf of

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such a resident, including a person with financial responsibility for that resident) shall not be valid or specifically enforceable.

Id. Unfortunately, these bills never made it out of committee before the end of the

session, but certain members of Congress saw fit to re-introduce such bills again in 2009,

each of which have been referred to committee (Senate Bill 512 and House Bill 1237,

attached hereto as Exhibit 6).

Fully recognizing that a bill is not a law, Plaintiff submits that such bills

evidence that, at very least, some members of Congress, the very body that enacted the

FAA, acknowledge a distinction between arbitration agreements in the nursing home

context and arbitration agreements generally. Further, no matter where one's political

values lie, Plaintiff respectfully suggests that for members of the current Congress,

arguably one of the most far-reaching in memory with respect to the bounds of federal

authority, to introduce bills restricting preemption by a federal statute (FAA), speaks

volumes about the importance of protecting the rights of nursing home residents.

Moreover, the Circuit Court, and Defendants, rely heavily on the United States

Supreme Court's decision in Preston v. Ferrer, 552 U.S. 346 (2008), to support their

position that the FAA supercedes the West Virginia NHA. Such reliance is misplaced,

however, because the Preston decision is clearly distinguishable from the issue before

this Court.

More particularly, Preston is a fact-specific matter concerning a contract entered

into by two attorneys, one a former Florida trial court judge acting as a television

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personality (Ferrer), and the other a California attorney who rendered services to those

in the entertainment industry (Preston). Id. at 350. The contract at issue in Preston

contained a provision whereby the parties agreed to arbitrate any dispute thereunder.

Id. When a dispute arose regarding payment for services, Preston demanded

arbitration pursuant to the contract, but Ferrer asserted that the entire contract was

invalid because Preston had acted as a talent agent without a license in violation of the

California Talent Agencies Act (TAA). Id. The TAA included a provision that any

contract with an unlicensed individual for talent agency services was "illegal and void."

Id. at 355. The TAA also provided that when controversies arose under the Act, the

parties shall submit the matter to the California Labor Commissioner. Id. Thus, the

issue before the Preston Court was whether the parties were required to submit the issue

of the subject contract's validity to arbitration, pursuant to the contract's language and

the FAA, or to the Labor Commissioner, per the TAA. Id. at 351. The United States

Supreme Court held that the parties in Preston were required to arbitrate the dispute

pursuant to the FAA.

The decision in Preston is in no way dispositive of the instant issue in this

matter. Preston did not concern an express statutory anti-waiver provision, citing public

policy as its justification, and Preston did not concern the nursing home context. As

discussed above, these are important distinctions which must be appreciated.

In a recent decision, this Court acknowledged that it is to "exercise restraint"

when using its broad power to determine public policy, and that it typically defers "to

21

the West Virginia legislature because it 'has the primary responsibility for translating

public policy into law.'" Swears v. R.M. Roach & Sons, Inc., 2010 WL 1839408 (2010)(only

Westlaw citation currently available), citing Tiernan v. Charleston Area Med. Ctr., Inc., 203

W.Va. 135, 141, 506 S.E2d 578, 584 (1998). Through the Nursing Home Act, and

specifically § 16-5C-15(c), the West Virginia legislature translated this state's public

policy loud and clear: any waiver by a nursin~ home resident to brin~ an action under

the NHA shall be null and void as contrary to public policy.

Such a profound statutory provision is not at issue, nor discussed, in Preston,

thus rendering that decision not on-point with the facts of the case before this Court. .

Therefore, Plaintiff respectfully requests that this Court recognize the

distinction acknowledged by elected representatives in this state, and at the national

level, between arbitration agreements in the nursing home context and arbitration

agreements in general, and in doing so, answer the subject certified question in the

negative.

C. Defendants' Arguments Regarding the Applicability of the FAA are Not Relevant Insofar as the Subject Arbitration Agreement is Void on its Face.

In their pleadings, Defendants outlined the tests for determining, and have

made attendant arguments regarding, the validity of an arbitration agreement under

the FAA. These tests are not relevant to this matter, however, insofar as the West

Virginia Nursing Home Act provision controls and subsequently invalidates the subject

arbitration agreement before the need to even examine the same under the FAA.

22

As discussed above, West Virginia Code § 16-5C-15(c) is a generally applicable

anti-waiver provision which should be deemed controlling for the current issues before

this Court. In addition, the language of the subject provision is clear in its meaning.

West Virginia Code §16-5C-15(c) states "any waiver" is null and void and there is no

question that the arbitration agreement at issue in this case was meant to be a waiver of

the parties' right to file suit against each other insofar as the agreement contains a

capitalized disclaimer stating

1HE PARTIES UNDERSTAND AND AGREE THAT BY ENTERING lHIS ARBITRATION AGREEMENT THEY ARE GIVING UP AND WAIVING THEIR CONSTITUTIONAL RIGHT TO HA VE ANY CLAIM DECIDED IN A COURT OF LAW BEFORE A JUDGE AND A JURY.

Further, the word "action", as in West Virginia Code § 16-5C-15(c)'s "the right

to commence an action under this section", is defined by Black's Law Dictionary as "[a]

civil or criminal judicial proceeding." (emphasis added) Black's Law Dictionary p. 24 (Bryan

A. Gamer ed., ~ ed., West 2000). Thus, the subject arbitration agreement was indeed a

waiver of the right to bring an action as contemplated and prohibited by West Virginia

Code § 16-5C.15(c). This clear interpretation of § 16-5C-15(c) was acknowledged by

Judge Groh in her Luttrell Order. Or. Denying Defs.' Mot. Dismiss p. 12. Therefore, it

remains clear that West Virginia Code § 16-5C-15(c) applies to the issue at hand and

invalidates the subject arbitration agreement prior to the necessity of any consideration

regarding the agreement's validity under the FAA.

23

IV. CONCLUSION AND RELIEF REQUESTED

In operating a nursing home facility in the State of West Virginia, Defendants

are charged with knowledge of, and compliance with, the West Virginia Nursing Home

Act (W.Va. Code § 16-SC-l et seq.). Thus, the Defendants should not now be permitted

to deny the existence or applicability of the explicit anti-waiver provision contained in

West Virginia Code § 16-SC-1S(c).

WHEREFORE; because the subject arbitration agreement is null and void

pursuant to the explicit statutory language of the West Virginia Nursing Home Act,

specifically West Virginia Code § 16-SC-1S(c), Plaintiff respectfully requests that this

Court adopt the reasoning the Circuit Court of Jefferson County, West Virginia, and of

the Appellate Court of Illinois, Fifth District, and thereby permit Plaintiff to pursue her

statutorily provided remedy pursuant to the NHA, by answering the subject certified

question in the negative.

Plaintiff/Appellant Requests the Opportunity of Oral Presentation of this Matter.

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POINTS AND AUTHORITIES RELIED UPON TABLE OF CASES

CASES Page No. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995) ....................... 10

Adkins v. Labor Ready, Inc., 303 F.3d 496,501 (4th Cir.2002) ........................ 10, 18

Doctors's Associates, Inc. v. Casarotto, 517 u.s. 681,116 S.Ct. 1652 (1996) ........... 11,14

Perry v. Thomas, 482 U.S. 483, 492, 107 S.Ct. 2520, 2527 (1987) .................... 11, 14

State ex reI. Saylor v. Wifkes, 216 W.Va. 766, 613 S.E.2d 914 (2005) cert denied 546 U.S. 958 ....................................................... 11

Carter v. SSC Odin Operating Co., LLC, 885 N.E.2d 1204, 1209 (Ill. App. 5 Dist. 2008) ..................................................... 12-17

Kinkel v. Cingular Wireless LLC, 223 Ill.2d 1, 15-19, 306 Ill.Dec. 157, 857 N.E.2d 250 (2006) ........................................................ 12

Order Denying Defendants' Motion to Compel Specific Performance of Arbitration Agreement and to Stay This Action Pending Arbitration in the matter of Luttrell v. Canterbury of Shepherdstown Limited Partnership, et al. . ........................................... 12, 13, 15, 23

Wellington Power Corp. v. CNA Sur. Corp., 217 W.Va. 33,39, 614 S.E.2d 680, 686 (2005) ..................................................... 12

Order Granting Defendants' Motion to Dismiss Plaintiffs Complaint and to Compel Arbitration, entered November 7, 2007, Grcuit Court of McDowell County ............................................... 15

Rainbow Health Care Center, Inc. v. Crutcher, 2008 WL 268321 (N.D.Okla. 2008) .... 15, 16

Fosler v. Midwest Care Center II, Inc., 391 Ill.App.3d 397,911 N.E.2d 1003 (2009) ...... 16

O'Hara v. Ahlgren, Blumenfeld & Kempster, 127 Ill.2d 333, 341, 130 Ill.Dec.401 (1989) ........................................................ 17

SSC Odin Operating Co., LLC, v. Carter, 129 S.Ct. 2734 (2009) ....................... 17

25

Preston v. Ferrer, 552 u.s. 346, 128 S.Ct. 978 (2008) .......................... 18, 20-22

Pine Ridge Coal Cnmpany v. Loftis, 217 F.supp.2d 905 (S.D.W.Va.2003) ............... 18

Gilmer v. InterstatelJohnson Lane Corp., 500 u.s. 20, 111 S.Ct. 1647 (1991) ............. 18

Southland Corp. v. Keating, 465 U.S. 1, 104 S.Ct. 852 (1984) ......................... 18

Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 123 S.Ct. 2037 (2003) ..................... 18

Morgan v. Ford Motor Cnmpany, 680 S.E.2d 77 (2009) .............................. 18

CSX Tranp. Inc. v. Easterwood, 507 U.S. 658, 664, 113 S.Ct. 1732, 123 L.Ed.2d 387 (1993) ....................................................... 18

Swears v. R.M. Roach & Sons, Inc., 2010 WL 1839408 (2010)(only Westlaw citation currently available) .......................................................... 22

Tiernan v. Charleston Area Med. Ctr., Inc., 203 W.Va. 135, 141, 506 S.E.2d 578, 584 (1998).22

United States Code 9 U.S.C. § 1, et seq. . .................................................... 4, 9, 10,

West Virginia Code W.Va. Code § 16-5C-l, et seq . ................. " ...... , ....... , .. , .. " ..... passim

W.Va. Code § 16-5D-18(f) ..................................................... 10

W.Va. Code § 16-5N-16(c) .................................................... 10

W.Va. Code § 21-5-10 ........................................................ 10

W.Va. Code § 31-17-17(b) ..................................................... 10

W.Va. Code § 38-8-15 ........................................................ 10

Illinois State Code 210 ILCS 45/3-606 (West 2006) ................................................ 13

Oklahoma State Code Okla. Stat. tit. 63, § 1-1900.1 et seq . ............................................. 16

26

Respectfully Submitted, Plaintiff, By Counsel,

27

· IN THE WEST VIRGINIA SUPREME COURT OF APPEALS

SHARON A. MARCHIO, Executrix of the Estate of Pauline Virginia Willett,

Plaintiff! Appellant,

v.

CLARKSBURG NURSING & REHABILITATION CENTER, INC., a West Virginia Corporation, d!b! a Clarksburg Continuous Care Center, SHEILA K. CLARK, Executive Director of Oarksburg Nursing & Rehabilitation Center, Inc., d!b! a Clarksburg Continuous Care Center, JOHNIJANE DOE #1, and JENNIFER MCWHORTER,

Defendants! Appellees.

WV Supreme Court Docket No. 35635

CERTIFICATE OF SERVICE

I, Chad L. Taylor, do hereby certify that I served the foregoing BRIEF OF APPELLANT SHARON A. MARCHIO this 8th day of July, 2010, by depositing a true and exact copy thereof in the United States mail, postage prepaid, upon the following:

Mark A.Robinson (WV Bar ID # 5954) Ryan A. Brown (WV Bar ID #10025) FLAHERTY, SENSABAUGH & BONASSO, P.L.L.c. Post Office Box 3843 Charleston, West Virginia 25338-3843

CUL~ Chad L. Taylor (W. V ar No. 1~64)

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EXHIBITS

ON

FILE IN THE

CLERK'S OFFICE